In the Danske money laundering scandal, the European Banking Authority (EBA) had gathered clear evidence of a series of violations of European law. Confidential EBA documents show that the Estonian (Finantsinspektsioon) and Danish (Finanstilsynet) financial supervisors of the Danish Danske Bank and its Estonian subsidiary repeatedly violated their obligations under the European Anti-Money Laundering Directive and the Capital Requirements Directive. However, the national supervisors comprising the EBA Board of Supervisors stopped investigations against the two financial supervisors at their meeting on 16 April 2019. In the EBA Board of Supervisors, only one EU Member State supported the recommendations of the EBA’s Breach of Union Law panel. This means that Europe’s biggest money laundering scandal remains without consequences for the time being, despite clear evidence of breaches of law by national authorities. After the EU Member States have put the brakes on the EBA, it is now up to the European Commission to continue the investigation of the Estonian and Danish financial supervisors.
In February, EBA launched a formal investigation into a possible breach of EU law by the two supervisors in the Danske case. The opening of the case followed several letters from Green MEPs in the European Parliament to the EBA and the European Commission after it became known that between 2007 and 2015 some 200 billion euros of suspicious transactions had been carried out via the Estonian branch of the Danish Danske Bank. Deutsche Bank, as the correspondent bank of Danske Bank, was also involved in the criminal transactions. The rejection of the EBA recommendations by the national authorities in the EBA Board of Supervisors took place on 16 April, that is only two days after the adoption of the governance reform of the European financial supervisory authorities in the European Parliament. The Greens, Social Democrats and Liberals, with the support of the Christian Democrats, had repeatedly called for a new and independent EBA Executive Board to be given decision-making powers in the event of conflicts of interest in the Board of Supervisors. However, EU Member States saw this as a restriction on their sovereignty and prevented it.
The spokesperson for Bündnis 90/Die Grünen in the European Parliament, Sven Giegold, said:
“The Danske case proves once more that the competent authorities of the EU Member States do not sufficiently cooperate in the European fight against money laundering. The obvious lack of effective cooperation among national authorities poses a considerable security threat for Europe.
It is scandalous that all but one national supervisor bluntly rejected the recommendation prepared by EBA. By voting against the EBA recommendations the national supervisors disregarded their legal obligation to act only in the European interest. It is grotesque that both the Danish and Estonian supervisors were allowed to vote on their own discharge.
After the failure of the EBA Board of Supervisors, the Commission must now open infringement procedures against Denmark and Estonia for breaching their obligations under the European Anti-Money Laundering Directive and the Capital Requirements Directive. But, beyond this single case: We urgently need a European Financial Intelligence Unit and a European financial police equipped with sufficient resources and powers to take effective action against cross-border financial crime.”
Letter of 12 September 2018 from the Greens/EFA Group to the European Banking Authority (EBA):
Letter of 12 September 2018 from the Greens/EFA Group to the European Commission:
Reply by the EBA of 26 April 2019: